FAAA laments cost of Govt legislative failures

Mike Taylor

Managing Editor and Publisher

21 April 2026

Successive Australian governments have legislated to fix problems within the financial services and financial advice space without paying due care and attention to the resultant impacts, the Financial Advice Association of Australia (FAAA) has told a key parliamentary committee.

The FAAA has used a submission to the Senate Select Committee on Productivity in Australia to walk through each piece of Government legislation and regulation since 2012 and then conclude that a consequence has been a 48% reduction in adviser numbers and a doubling in the cost of financial advice.

The FAAA has, amongst other things, recommended co-regulation and self-regulation as a part of the answer giving decision making to professionals who understand the issues and their implications.

Referring to the list of changes implemented by Government, the FAAA submission sates: “One of the factors that is most evident in these major reforms to the financial advice regulatory regime is the lack of or inadequacy of the necessary regulation impact assessment”.

“The Banking Royal Commission reforms stand out as an absolute low point in this regard, where often no regulation impact statement was undertaken at all, on the grounds that the Royal Commission was considered to be akin to a regulation impact statement,” the FAAA said.

“This is despite the fact that the Royal Commission undertook no obvious assessment of the impact of their recommendations even though the Letters Patent included a specific reference to doing so. Regrettably, during this period of time, the focus on this dimension of good regulatory change governance was missing,” it said.

The FAAA submission also pointed to the errors often found in Treasury drafting of legislation and regulation, noting that “our experience is that event hose draft errors that re acknowledged early, can take at least a couple of years to fix”.

“Removing ineffective legislation is another level of complexity and can take a decade or more to be addressed,” it said. “It is so important that legislative change is appropriate and correct at the time it is legislated, rather than needing to be fixed up later.

The FAAA submission also referenced the regulatory tax burden most directly confronting the financial advice profession, as opposed to other businesses, as being exposure to the Australian Securities and Investments Commission (ASIC) funding levy and the Compensation Scheme of Last Resort (CSLR) levy.

“In the 2026/27 financial year, both of these levies are likely to be in the vicinity of $3000 per financial adviser,” it said. “This is a particularly material cost that will impact the cost of financial advice to retail clients and …. lead to a reduction in the number of financial advisers”.